After various measures trying to provoke change among the administration, the movement took its most drastic measure. Some studies make the extreme assumption that local governments will absorb all of the cost increases from a living wage. If credible, this information suggests that firms might reduce profits to absorb added labor costs from a living wage ordinance. The only way for workers to benefit from living wage laws is if they are covered by laws that are implemented and enforced.
But some companies argue that paying the living wage could lead to job losses, and others say that they have been hit by the financial crisis so could not increase staff costs to this level.
Some big local authorities have adopted the living wage, such as Cardiff, Birmingham and Newcastle. Some workers have had to fight to have their employer adopt the living wage. Cleaners in the Houses of Parliament went on strike back in to demand pay rises that would bring them up to the living wage. They achieved their aim in Some cleaners on the London Underground staged industrial action, including strikes, over two years before Transport for London TFL conceded a deal based on the living wage in It looked into the subject for a year, then recommended that the UK government should make it a goal to cut the number of low paid workers by one million by It said that the government should pay its own workers the living wage, and that private sector companies that are capable should also pay.
However, it said that other firms should not be forced to do so, especially if this could put jobs at risk. The prime minister calls for "cool heads" as the UK and the EU search for a deal ahead of a key summit. What is the living wage? Image caption The living wage is not the same as the minimum wage The living wage is based on the amount an individual needs to earn to cover the basic costs of living. It has received widespread political support, but limited endorsement by employers.
Prime Minister David Cameron has said he supports the idea in principle. Related Topics UK economy Personal finance. More on this story. Political campaigning, without politicians. Ed Miliband sets out Labour's minimum wage plans. The evolution of the concept can be seen later on in medieval scholars such as Thomas Aquinas who argued for a 'just wage'.
Prices and wages that prevented access to necessities were considered unjust as they would imperil the virtue of those without access. In Wealth of Nations , Adam Smith recognized that rising real wages lead to the "improvement in the circumstances of the lower ranks of people" and are therefore an advantage to society.
Rising real wages are secured by growth through increasing productivity against stable price levels, i. A system of liberty, secured through political institutions whereupon even the "lower ranks of people" could secure the opportunity for higher wages and an acceptable standard of living. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society.
But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed and lodged. Based on these writings, Smith advocated that labor should receive an equitable share of what labor produces. For Smith, this equitable share amounted to more than subsistence.
Smith equated the interests of labor and the interests of land with overarching societal interests. He reasoned that as wages and rents rise, as a result of higher productivity, societal growth will occur thus increasing the quality of life for the greater part of its members. Like Smith, supporters of a living wage argue that the greater good for society is achieved through higher wages and a living wage. It is argued that government should in turn attempt to align the interests of those pursuing profits with the interests of the labor in order to produce societal advantages for the majority of society.
Smith argued that higher productivity and overall growth led to higher wages that in turn led to greater benefits for society. Based on his writings, one can infer that Smith would support a living wage commensurate with the overall growth of the economy. This, in turn, would lead to more happiness and joy for people, while helping to keep families and people out of poverty.
Political institutions can create a system of liberty for individuals to ensure opportunity for higher wages through higher production and thus stable growth for society. The church recognized that wages should be sufficient to support a family. This position has been widely supported by the church since that time, and has been reaffirmed by the papacy on multiple occasions, such as by Pope Pius XI in Quadragesimo anno and again in , by Pope John XXIII writing in the encyclical Mater et magistra.
More recently, Pope John Paul II wrote, "Hence in every case a just wage is the concrete means of verifying the whole socioeconomic system and, in any case, of checking that it is functioning justly. Universal Declaration of Human Rights , Art. Different ideas on a living wage have been advanced by modern campaigns that have pushed for localities to adopt them. Supporters of a living wage have argued that a wage is more than just compensation for labor.
It is a means of securing a living and it leads to public policies that address both the level of the wage and its decency. John Ryan argues for a living wage from a rights perspective. He considers a living wage to be a right that all laborers are entitled to from the 'common bounty of nature'. As such, the obligation to fulfill the right of a living wage rests on the owners and employers of private resources. His argument goes beyond that a wage should provide mere subsistence but that it should provide humans with the capabilities to 'develop within reasonable limits all [their] faculties, physical, intellectual, moral and spiritual.
Jerold Waltman, in A Case for the Living Wage, argues for a living wage not based on individual rights but from a communal, or ' civic republicanism ', perspective. He sees the need for citizens to be connected to their community, and thus, sees individual and communal interests as inseparably bound. Two major problems that are antithetical to civic republicanism are poverty and inequality.
A living wage is meant to address these by providing the material basis that allows individuals a degree of autonomy and prevents disproportionate income and wealth that would inevitably lead to a societal fissure between the rich and poor.
A living wage further allows for political participation by all classes of people which is required to prevent the political interests of the rich from undermining the needs of the poor. These arguments for a living wage, taken together, can be seen as necessary elements for 'social sustainability and cohesion'. Donald Stabile argues for a living wage based on moral economic thought and its related themes of sustainability, capability and externality.
Broadly speaking, Stabile indicates that sustainability in the economy may require that people have the means for 'decent accommodation, transport, clothing and personal care'. Stabile's thoughts on capabilities make direct reference to Amartya Sen 's work on capability approach. The enhancement of people's capabilities allows them to better function both in society and as workers. These capabilities are further passed down from parents to children. Finally, Stabile analyzes the lack of a living wage as the imposition of negative externalities on others.
These externalities take the form of depleting the stock of workers by 'exploiting and exhausting the workforce'. Other contemporary accounts have taken up the theme of externalities arising due to a lack of living wage.
Muilenburg and Singh see welfare programs, such as housing and school meals, as being a subsidy for employers that allow them to pay low wages. This thought is repeated by Grimshaw who argues that employers offset the social costs of maintaining their workforce through tax credits, housing, benefits and other wage subsidies.
In Australia , the Harvester Judgment ruled that an employer was obliged to pay his employees a wage that guaranteed them a standard of living which was reasonable for "a human being in a civilised community" to live in "frugal comfort estimated by current The judgment was later overturned but remains influential.
From the Harvester Judgement arose the Australian industrial concept of the "basic wage". For most skilled workers, in addition to the basic wage they received a margin on top of the basic wage, in proportion to a court or commission's judgement of a group of worker's skill levels.
From , the basic wage was indexed against the C Series Index of household prices. The concept of a basic wage was repeatedly challenged by employer groups through the Basic wage cases and Metal Trades Award cases where the employers argued that the basic wage and margin ought to be replaced by a "total wage". The basic wage system remained in place in Australia until It was also adopted by some state tribunals and was in use in some states during the s.
In Bangladesh salaries are among the lowest in the world. It has laid down a road map to achieve sustainable wages. Municipal regulation of wage levels began in some towns in the United Kingdom in National minimum wage law began with the Trade Boards Act , and the Wages Councils Act set minimum wage standards in many sectors of the economy.
Wages Councils were abolished in and subsequently replaced with a single statutory national minimum wage by the National Minimum Wage Act , which is still in force.
The rates are reviewed each year by the country's Low Pay Commission. From 1 April the minimum wage has been paid as a mandatory National Living Wage for workers over It is being phased in between and and is set at a significantly higher level than previous minimum wage rates. In the United States , the state of Maryland and several municipalities and local governments have enacted ordinances which set a minimum wage higher than the federal minimum that requires all jobs to meet the living wage for that region.
This effort began in when an alliance between a labor union and religious leaders in Baltimore launched a successful campaign requiring city service contractors to pay a living wage.
In , there were at least living wage ordinances in cities throughout the United States and more than living wage campaigns underway in cities, counties, states, and college campuses. Although these ordinances are recent, a number of studies have attempted to measure the impact of these policies on wages and employment. Researchers have had difficulty measuring the impact of these policies because it is difficult to isolate a control group for comparison.
A notable study defined the control group as the subset of cities that attempted to pass a living wage law but were unsuccessful. Research shows that minimum wage laws and living wage legislation impact poverty differently: Neumark and Adams, in their paper, "Do living wage ordinances reduce urban poverty? However, there is no evidence that state minimum wage laws do so. A study carried out in Hamilton, Canada by Zeng and Honig indicated that living wage workers have higher affective commitment and lower turnover intention.
The current minimum national minimum wage in the United States, does not support a livable wage for the employees. Due to the fact that they are underpaid, the reliance on federal and state aid is inflated.
It is estimated that if there would be a savings of approximately 18 billion dollars in federal aid if the minimum wage was raised to 12 dollars an hour. Some of the other benefits to the employees would be increased self-esteem and job satisfaction, which would also trickle down to the children of those workers. These children would see improved social environments and perhaps more success at school due to this support.
With the increase in wage, the employee would also have an increased buying power which would help stimulate the economy and create more jobs. As of , there are living wage ordinances in American cities and an additional 75 under discussion.
In addition to legislative acts, many corporations have adopted voluntary codes of conduct. The Sullivan Principles in South Africa are an example of a voluntary code of conduct which state that firms should compensate workers to at least cover their basic needs. In the table below, cross national comparable living wages were estimated for twelve countries and reported in local currencies and purchasing power parity PPP. It engaged in a series of Living Wage campaigns and in the Greater London Authority established the Living Wage Unit to calculate the London Living Wage, although the authority had no power to enforce it.
The Living Wage campaign subsequently grew into a national movement with local campaigns across the UK. In , research into the costs and benefits of a living wage in London was funded by the Trust for London and carried out by Queen Mary University of London.
A report by the Living Wage Commission, chaired by Doctor John Sentamu , the Archbishop of York , recommended that the UK government should pay its own workers a "living wage", but that it should be voluntary for the private sector. The research highlights the need to improve incomes through better wages, mainly, the London Living Wage, to ensure more Londoners reach a decent standard of living. Ed Miliband , the leader of the Labour Party in opposition from until , supported a living wage  and proposed tax breaks for employers who adopted it.
It emerged from a loose network that launched a Living Wage Campaign in May In there were over 50 faith, union and community member organisations and by there were The twenty businesses for included food manufacturing, social service agencies, community organisations, unions, and a restaurant. This number has now increased to 90 businesses, including the first corporate, Vector. Wellington City Council has committed to becoming an accredited Living Wage Employer and five other local government bodies, including Auckland Council, have taken their first steps toward implementing the Living Wage.
In the election of September the three parties that form the Government have also committed to a Living Wage for employees and contracted workers to the core public service.
Launched in , Asia Floor Wage is a loose coalition of labour and other groups seeking to implement a Living Wage throughout Asia, with a particular focus on textile manufacturing. The campaign targets multinational employers who do not pay their developing world workers a living wage. The proposed law will inform tax-payers of where their investment dollars go and will hold developers to more stringent employment standards. The proposed act will require developers who receive substantial tax-payer funded subsidies to pay employees a minimum living wage.
The law is designed to raise quality of life and stimulate local economy. The living wage will get indexed so that it keeps up with cost of living increases. Workers employed at a subsidized development will also be entitled to the living wage guarantee. Many city officials have opposed living wage requirements because they believe that they restrict business climate thus making cities less appealing to potential industries.
Logistically cities must hire employees to administer the ordinance. Conversely advocates for the legislation have acknowledged that when wages aren't sufficient, low-wage workers are often forced to rely on public assistance in the form of food stamps or Medicaid.
James Parrott of the Fiscal Policy Institute testified during a May New York City Council meeting that real wages for low-wage workers in the city have declined substantially over the last 20 years, despite dramatic increases in average education levels.
A report by the Fiscal Policy Institute indicated that business tax subsidies have grown two and a half times faster than overall New York City tax collections and asks why these public resources are invested in poverty-level jobs.
Effects of living wages on municipalities and consumers
We developed a living wage calculator to estimate the cost of living in your community or region based on typical expenses. The tool helps individuals, communities, and employers determine a local wage rate that allows residents to meet minimum standards of living. Living Wage Calculation for New York County, New York The living wage shown is the hourly rate that an individual must earn to support their family, if they are . The Living Wage Law requires certain employers that receive at least $1 million of financial assistance from the City or a City economic development entity to pay no less than the living wage to their employees at the project site, unless the employer qualifies for certain exemptions.